Funny? Actually, no. This kind of gullible customer would pay the higher price for the smaller towel, blissfully unaware of what is going on. By extension (a long one), it's how the sub-prime mess got so bad. Customers did not understand the math of home loans.

Stupid? Not fair to say that. Lots of people suffer from conceptual difficulties through no fault of their own. At the extreme end of the scale, dyscalculics (those who struggle in math the same way dyslexics struggle in language) have no number sense, which means they have trouble with manipulating numbers in their head. They also struggle with estimating large numbers and measurement. There are physical reasons why they cannot understand why a smaller towel will be cheaper. It sounds hard to believe, but dysclaculis is a reality for a significant proportion of the population (around 5% by some estimates).